Starting a business in Germany: Guide for Indian residents with requirements, fees and opening Germany business account

Germany has one of the strongest economies in Europe and offers visas for self-employment and freelancing. Indian citizens can consider starting a business in Germany but it requires having the correct visa and residency permit. Read on to learn more about the process of setting up a business, especially as a non-citizen, and what to expect from the process.

Can you register a company in Germany from India?

Yes, you can register a company in Germany if you are from India as long as you have an appropriate permit. A work permit in addition to a visa will allow Indian citizens to work, be self-employed or run a business in the country, although there can be some restrictions.¹

Germany has unique provisions for people looking to be self-employed. Self-employment can fall into two categories depending on the industry- business people or liberal professions- and each is registered differently:²

• Business people (Gewerbetreibende): this includes professional activities where you can earn money like producers of goods, craftspeople and traders. Gewerbetreibende are required to register at the Trade Office.
• Liberal professions (Freie Berufe): this includes professions including healthcare professionals like doctors, attorneys, surveyors, journalists and engineers. There is no trade tax on Freie Berufe.

The Tax Office in Germany can help you identify which category is most appropriate for you.

Check out the section at the end of this article for details on the different visa options available to non-German citizens.

Different types of companies in Germany

There are three main legal structures for businesses in Germany. Each one has different obligations and responsibilities as a business owner.

• Sole proprietorship (Einzelunternehmen): A small business where you are the only owner, being self-employed or a freelancer would fall under a sole proprietorship. This type of business means that the owner takes personal responsibility for the business's debts and obligations. Most sole proprietorships will need to register with the Commercial Register, but a freelancer would need to apply for a tax number form the Tax Office.
• Limited liability company (GmBH): A limited liability company must have an notarized articles of association (AoA) and one shareholder. This type of company must be registered with the Commercial Register and the minimum capital requirement for a GmBH is €25,000. A provisional company with limited liability (UG) may be set up under this structure.
• Civil law partnership (GbR): A GbR has one or more partners and is considered a civil code company. Freelancers and business people can establish a GbR, and there is no required written agreement or minimum capital requirement. A GbR does make the partners open to having their personal assets responsible for the company debts.

There are other legal structures- like Partnerschaftsgesellschaft (PartG), GmbH & Co. KG or Kommanditgesellschaft (KG), but it is recommended to talk to a consultant with the Chamber of Industry and Commerce or a tax advisor first when choosing a structure.³

Requirements to start Germany company from India

Here are the basic requirements to start a company in Germany:

• You must be at least 18 years old.
• You must not be banned from practicing the profession in which you want to set up a business.
• You must have the correct residence title or work permit.

If you meet these requirements, you can take these steps to start your company in Germany:⁴

1. Identify your type of business: You can work in Germany as a self-employed individual (gewerblich) or freelancer (freiberuflich), or open a legal business structure that is separate from you as a person.
2. Register your business: You will need to register according to your type of business. Freelancers must register with the Tax Office (Finanzamt) while self-employed entrepreneurs will need to contact thelocal trade office. Any other type of company needs to be registered in the Commercial Register.
3. Pay taxes: All businesses will have to pay taxes to the local tax office or authority of Germany’s fiscal administration. The type of taxes you need to pay will depend on your revenue, business size and structure. Businesses will also need to file an annual tax return.
4. Get required licenses or permits: Depending on the type of business, you may be required to have a special permit or license to operate in Germany.
5. Put insurance plans in place: Ensure that you have the correct insurance in place, even as a self-employed individual or freelancer, and for your employees if applicable. The German government suggests looking at health insurance, accident insurance andbusiness liability insurance.
6. Review contracts and laws: While larger companies can have staff to ensure compliance and enact contracts, small businesses, the self-employed or freelancers will generally have to do the work themselves. The Federal Ministry of Economic Affairs has resources for finding and hiring staff while the German Chambers of Industry and Commerce can help make sure you are meeting your legal regulations and obligations.

If you are starting a business in Germany, it is suggested to know German. While it is not a requirement, being able to speak, read and write German is very helpful since official paperwork from the government is only in German and local clients and business partners may expect you to know the language. The government can help you find ways to take language classes or learn German through the Goethe-Institut.

Lastly, one of the main factors in starting a company is ensuring you have enough financial backing. New startups or people who are new to a profession can reach out to the Ministry of Economic Affairs for help to understand available resources. Keep in mind that many of the government websites are in German so you can use Google translate (if you are using Chrome) to translate the websites into English. ⁵

What does it cost to run a Germany company

Running a business in Germany is similar to running a business in almost any other country. Here are a few examples of common business expenses:

• Employee salary and benefits: The cost to pay yourself and employees salaries tends to be one of the largest expenses for a business. The current minimum wage in Germany is €12 per hour.⁶
• Rent, utilities and equipment: You will need a physical address when you’re registering at the Tax Office or Company Register. Many modern businesses may not have a physical office which can save on rent, but that could mean spending on co-working spaces and computer equipment for work-from-home employees.
• Marketing and business development: A business’s growth can often be directly tied to business development and marketing activities. Ensure you have funds set aside to grow your business once it is established.
• Taxes and insurance: Making sure you are paying your taxes on time can save you from paying penalties down the road, while having the right insurance can protect you and your business.

The exact costs of each of these will depend on the scale and size of your business. Finding a good accountant or business advisor can help you make sure you are spending appropriately to your business needs.

Starting costs for setting up the company

There are fees associated with getting a business started in Germany depending on your type of business. For example, the self-employed who register at a Trade Office have to pay a registration fee of €10 - €40 EUR. While a company in certain industries may need to pay a membership fee to the Chamber of Industry and Commerce [Industrie- und Handelskammer (IHK)]. The Trade Office will be the best place to start to understand which fees will be required for your business, its structure and industry. ⁷

Taxes for a business

There are a number of taxes to be aware of when starting a business in Germany. Keep these in mind when identifying the type of business you want to start:⁸

• VAT: This is a standard rate tax of around 19% on goods and services. Certain industries like the arts and media can have a reduced rate of 7%. Small scale entrepreneurs do not need to pay VAT if your turnover was not more than €17,500 in the last calendar year and you don’t expect it to be more than €50,000 in the current year.
• Input tax: This tax is paid on nearly all company-related purchases.
• Income tax: Income tax is paid on any received income and is especially important for those who are self-employed or a freelancer. A tax advisor can be helpful in making sure you are paying the appropriate amount.
• Trade tax: You may be required to pay a trade tax every quarter to your municipality depending on your industry and profession.
• Corporation tax: As stated in the name, a corporation tax is only for corporations and is required to be paid every quarter.

Entrepreneurs can learn more about taxes they may need to pay on the Federal Ministry of Economic Affairs website.

Starting a business account for Germany company

Once your business is set up or registered, you can open a business bank account. A business bank account will help separate the business’s finances from your own and allow you to make and receive payments. A business bank account can also make it more possible to receive business loans, if needed.

There are popular traditional banks like Deutsche Bank and Commerzbank which can help you open an account. But if you are working globally, whether with suppliers in India or a distributed team in different countries, sending and receiving transfers is going to be vitally important. Check out the Wise Business Account which gives bank details in multiple countries and allows seamless international transfers.

Meet Wise Business

The Wise Business Account makes sending and receiving money from around the world simple. It is a business account with no hidden fees and uses the real mid-market exchange rate on all transfers. That’s the same exchange rate you see on Google.

You can easily pay invoices, suppliers, freelancers or employees right from the app. And the Wise Business Account can blend right into your business by linking to your existing accounting software like Xero and Quickbooks.

Our online process lets you open and verify your Germany business account from India. With our customer support available in English and our commitment to providing a seamless digital experience, Wise offers an ideal alternative to traditional banks for your business abroad.

Business categories supported on Wise 👉

Moving to Germany from India

If you are moving from India to Germany, you will need to apply for the right visa and residence permit with the German embassy in India before your travel. You will need to apply for a visa for either a self-employed business or a freelance business. This will allow you to work and start your business, if you are approved, but the process can take two to four months.

Here are the details on each visa:

• Visa for self-employed business: To get this visa, you must show commercial interest or regional demand for your business idea, evidence of funding and how it can impact Germany positively.
• Visa for freelance business: A freelancer will need to show evidence that you can fund your business, support yourself in Germany and show proof of health insurance. It is recommended to also provide references and evidence of your entrepreneurial experience.

The cost of each visa can range from €80 - 100 EUR.

If you are already in Germany and you are ready to start your own business, you can apply for a self-employment resident permit at the Foreigner’s Authority Office. If you have received a degree from a German university and you want to set up a business related to your degree or research, you won’t need to meet the commercial activity or interest requirements above.⁹

Cover photo by Razvan Chisu on Unsplash.